Client Situation

A manufacturing services provider watched the revenue and profit of its industrial parts repair business slowly decline over the course of three years. Its three repair service centers were not achieving a sufficient volume of core parts repairs to cover the high fixed costs associated with their operations. After a number of efforts to reinvigorate the product line, management decided to bring in Alliance to provide an assessment of the product’s overall strategy and make recommendations for the product line’s future.

Alliance worked in collaboration with senior management and the product management team to assess the strategic direction of the business. Alliance also worked in a hands-on fashion to lead the implementation of the strategy and assist in daily management decisions.

Alliance Approach

The team surveyed a number of existing customers, assessed drivers of historical financial performance, and launched a detailed analysis of data associated with tens of thousands of parts repair transactions. Alliance also examined the performance of the existing direct sales, marketing, and customer support infrastructure.

Based on the analysis and Alliance’s experience in similar transaction-focused businesses, the team uncovered a number of key insights that drove major changes in repositioning the overall sales and marketing efforts:

Segment Customer BaseCurrent sales efforts consisted solely of a ten-person field sales force, attempting to sell repair services to thousands of customers and prospects across the country. This “one-size-fits-all” approach was not sustainable in an increasingly competitive market, given a portfolio of existing customers of varying sizes across a multitude of industries. To address this problem, the team devised a segmentation scheme based on “revenue potential” of each customer, as driven by the combination of certain customer characteristics. This approach allowed for the creation and delivery of tailored value propositions and sales strategies that better met the needs of each major customer segment.

Maximize Efficiency of Selling Expenses
There were many customer interactions that afforded untapped opportunities to cross-sell repair services to existing customers. As a result, the team recommended reinventing a customer service center as a telephone-based sales channel, staffed by Telephone Account Managers, and targeted towards serving the needs of small-potential customers. At the same time, the team recommended repositioning the field sales force to call on medium- and large-potential customers across a new set of geographic territories. These new territories were determined via a comprehensive analysis of manufacturing density.

Develop the Discipline of Campaign-Driven Selling
Existing sales and marketing activities were a random, uncoordinated set
of events that drove an inconsistent volume of repairable industrial parts
to the repair service centers. Without a consistent flow of parts to the
service centers, these high fixed cost locations were losing a considerable
amount of cash each month. The team recommended and implemented a
campaign-driven sales and marketing infrastructure that identified specific
categories of high-margin repairs and organized multiple sales channels to
win those repairs from existing and new customers. Targeting the “right”
customers with the “right” product, based on customers’ transactional data, provided a sustainable increase in incoming repairable parts to the repair service centers.

Results and Impact

As a result of the team’s recommendations, the business reversed a 10% operating loss in a matter of months. Customer loyalty climbed significantly as the company repositioned its sales approach to better serve targeted customer needs.